2021
DECEMBER
THE CLIMATE DELEGATED ACT WAS PUBLISHED
On December 9th the first part of the EU Taxonomy, the Climate Delegated Act, was published in the Official Journal of the European Union as the Commission Delegated Regulation (EU) 2021/2139. The Act will enter into force on December 29th and should be applied from January 1st 2022. The Delegated Regulation supplements the Taxonomy Regulation by “establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives”.
THE DUTCH GOVERNMENT ANNOUNCES A NATIONAL CORPORATE DUE DILIGENCE LEGISLATION
The Dutch minister of Foreign Trade and Development, De Bruijn, announced that the Dutch Government intends to table a domestic law on mandatory human rights and environmental due diligence. The Dutch Government published a non-paper outlining the Dutch position on mandatory due diligence.
POSTPONEMENT OF EC DRAFT DIRECTIVE ON SUSTAINABLE CORPORATE GOVERNANCE
The release of the text of the Draft Directive of the European Commission on Sustainable Corporate Government has been postponed to the first trimester of 2022.
CRIMINAL COMPLAINT AGAINST DUTCH AND US BRANDS FOR COMPLICITY IN FORCED LABOUR
In the begin of December, the European Center for Constitutional Rights (ECCHR), filed a criminal complaint in the Netherlands against Patagonia, Nike, C&A and State of Art on the basis of allegations of complicity in the use of forced labour of the Uyghur community in China’s Xinjiang province. This complaint is part of a series of criminal complaints in Europe targeting European companies with connections to the Xinjiang province. Similar complaints have already been filed in Germany and France.
THE COURT OF APPEAL OF VERSAILLES CONFIRMS THE JURISDICTION OF CIVIL COURTS ON THE CLIMATE LITIGATION AGAINST TOTAL
In December 2019, 14 French local authorities, together with the 5 French and Ugandan NGOs sought an injunction against French oil & gas company Total. The claim was filed on the basis of the French Duty of Vigilance Law as well as on the new Article 1252 of the French Civil Code – which gives the judge the power to order measures to cease or prevent environmental damage – on the grounds that Total’s vigilance plan “does not ensure that [the company] aligns with a trajectory compatible with the objectives of the Paris Agreement” and requested the court order to require Total to “take adequate measures to prevent the risks arising from its activities, by drastically reducing its greenhouse gas emissions”. Total challenged the jurisdiction of civil courts and requested for the case to be referred to the commercial courts. On the 11th of February 2021, the Tribunal Judiciaire de Nanterre confirmed its jurisdiction over the claim and affirmed that the claimants as ‘non-traders’ had the options to choose to bring their claim before the civil courts or the commercial courts. On the 18th of November, the Court of Appeal of Versailles confirmed the judgement of the first instance judge.
NOVEMBER
THE UN WORKING GROUP ON BUSINESS AND HUMAN RIGHTS RELEASED THE UNGPS 10+ ROADMAP
On the 29th of November, the UN Working Group on Business and Human Rights released the UNGPs 10+ – A Roadmap for the Next Decade of Business and Human Rights. This Roadmap and the Stockholding (document taking stock of the first decade of implementation of the UNGPs) are the results of the Working Group’s UNGPs 10+ Project. The Roadmap follows the Stockholding document, by completing the analysis of the first ten years and making recommendations for the next decade. In particular, the document urges for more coherent action and identifies eight action areas to foster the state and business implementation of the UNGPs: (1) UNGPs as a compass for meeting global challenges, (2) State duty to protect, (3) Business responsibility to respect, (4) access to remedy, (5) stakeholder engagement, (6) leverage to drive faster change, (7) tracking of progress, and (8) international cooperation and implementation support. On each action area the roadmap provides for specific goals to achieve and supporting actions to be taken by States, businesses, and other stakeholders.
THE UNITED KINGDOM PASSED THE ENVIRONMENT BILL
Two years after its introduction, the UK Environment Bill received Royal Assent and became law on the 9th of November 2021. The law intends to be the new UK’s framework on environmental protection while providing the Government with powers to establish new legally binding targets on the field. It covers, inter alia, waste and resource efficiency, air quality, water, nature and biodiversity. The new Bill includes the creation of the new post-Brexit watchdog and the new Office for Environmental Protection. It also establishes a “comply or explain” mandate on deforestation for UK companies importing forest-risk commodities. Additionally, it introduces a forthcoming ban on selected single-use plastics.
BUSINESS AND HUMAN RIGHTS RESOURCE CENTRE (BHRRC) RELEASES THE SECOND EDITION OF ITS RENEWABLE ENERGY AND HUMAN RIGHTS BENCHMARK
The 2021 edition of the Renewable Energy and Human Rights Benchmark was published this November. The benchmark aims to ‘evaluate the human rights policies and practices of 15 of the largest global renewable energy companies’. The report noted some improvement compared to its first edition carried out a year before. However, it affirmed that ‘the overall results remain profoundly concerning, with companies scoring an average of just 28%’ on the benchmark. It also noted that companies scored lowest on benchmark indicators that represent the sector’s most salient human rights risks – land rights, indigenous people’s rights, and protection for human rights defenders’. In this respect, the BHRRC recorded over 200 allegations linked to renewable energy projects in last 10 years, amongst which nearly half (44%) concern the wind and solar sectors. Reported abuses include land and water grabs, violation of rights of indigenous people, and the denial of workers’ right to decent work and a living wage.
WORLD BENCHMARKING ALLIANCE’S JUST TRANSITION ASSESSMENT
The World Benchmarking Alliance published the report “Just Transition Assessment 2021: Are high-emitting companies putting people at the heart of decarbonisation?”. The report relies on an assessment of the public disclosures of 100 oil and gas companies, 50 electric utilities and 30 automotive manufactures. The main key findings of the report are as follows:
– The vast majority of high-emitting companies fail to demonstrate efforts towards a just transition;
– People most at risk are being left out of decisions that affect their future;
– Companies must commit to reskilling workers or risk a stranded workforce;
– Businesses still not using their influence to protect people, manage social impacts and advocate for a just transition;
– A just transition needs to be underpinned by companies’ respect for human rights.
NEW ACTION TOOLKIT CENTRES WOMEN IN THE NET-ZERO ECONOMY
Business Fights Poverty and the PwC team implementing the Work and Opportunities for Women (WOW) programme for the UK Foreign, Commonwealth and Development Office published the toolkit “Women and the Net Zero Economy: A Transition Toolkit for Businesses with Global Supply Chains”. The work identifies three core ways for companies to have an impact on gender and climate: foster communication between different departments of the company that deal with environmental and social issues; take an holistic view, ’embedding action on gender and climate into core business and supply chains’; collaborate internally and externally.
COP26 OF THE PARIS AGREEMENT
The 26th UN Climate change conference of the Parties took place between the 31st of October and the 13th November. About 151 countries representing 81,2% of the global emissions committed to new climate plans (known as nationally determined contributions, or NDC’s) by 2030. The EU, representing the 27 member-states, reaffirmed its commitment to reduce emissions to at least 55% by 2030 compared to 1990 and to be “climate neutral” by 2050. Over 100 countries signed up to the Global Methane Pledge, committing to take actions to contribute to a collective effort to reduce global methane emissions by at least 30 percent from 2020 levels by 2030. Other important developments concern the establishment of rules for a new global carbon market, a new commitment to double funding to help developing countries (despite previous commitment not having been delivered), and a number of side deals on issues of deforestation, international financing of coal projects, eradication of oil and gas exploitation projects. The Glasgow Climate Pact with the formal outcomes of the COP26 here.
THE UK GOVERNMENT ANNOUNCED MANDATORY CLIMATE-RELATED DISCLOSURE TO BECOME LAW IN APRIL 2022
The UK government announced the introduction of a legislation in April 2022 which will require mandatory climate-related disclosure by companies and financial institutions.
43 INVESTORS, BUSINESS ASSOCIATIONS AND COMPANIES ISSUE A STATEMENT CALLING FOR MEANINGFUL AND SAFE STAKEHOLDER ENGAGEMENT IN THE UPCOMING EU MANDATORY DUE DILIGENCE LEGISLATION
On the 10th of November 43 investors, business associations and individual companies- including Unilever, Aviva Investors, Patagonia, Tchibo and Hewlett Packard Enterprise – issued a joint statement affirming their strong support for mandatory human rights and environmental due diligence (mHREDD) legislation. The statement highlights that ‘mHREDD is key to ensure that efforts by companies that respect people and the planet, both during and post COVID-19, are not undercut by the lack of a uniform standard of conduct applying to all business actors based in the EU or active in the EU market.’ In addition, the statement calls for ‘meaningful engagement with rightsholders and civil society society, including human rights defenders (HRDs)’ and outlines the importance of an inclusive process that is gender-sensitive and intersectional. It also refers to the full respect of the principle and process of Free, Prior and Informed Consent (FPIC) with regards to Indigenous Peoples.
COMMISSION PROPOSES TWO REGULATIONS ON DEFORESTATION-FREE PRODUCTS AND WASTE SHIPMENTS AND THE EU SOIL STRATEGY FOR 2030
On the 17th of November the Commission proposed three new initiatives on the issues of deforestation, waste management and soils sustainability, all ‘necessary to make the European Green Deal a reality’.The first proposal concerns a new Regulation to curb-EU-driven deforestation and forest degradation. The initiative sets mandatory due diligence for companies placing in the EU market main commodities driving agricultural expansion that leads to deforestation – namely, soy, beef, palm oil, wood, cocoa, coffee and other derived products. Additionally, it provides for a system of benchmarking to assess countries and their level of risk of deforestation and forest degradation driven by the commodities in question. The second proposal concerns a revised Regulation on waste shipments. The text seeks to ‘facilitate intra-EU waste shipments, promote circular economy and tackle the export of illegal waste and waste challenges to third countries‘. It foresees restricting waste exports to non-OECD countries, which will only be allowed if thirds countries are able to manage them sustainably. When exporting to OECD countries, shipments will need to be monitored and may be suspended if they generate serious environmental issues in the country of destination. In any case, all companies exporting waste outside the EU will need to go through an audit and must prove to manage waste in an “environmentally sound manner”. Thirdly, the Commission presented a new EU Soil Strategy for 2030. The proposal sets a framwork with voluntary and legally binding measures for Member States with the aim of increasing soil carbon in agricultural land, combat desertification, restore degraded land and soil and entails a commitment to ensure that by “2050 all soil ecosystems are in a healthy condition”.
OCTOBER
7TH SESSION OF THE OEIGWG ON TRANSNATIONAL CORPORATIONS AND OTHER BUSINESS ENTERPRISES WITH RESPECT TO HUMAN RIGHTS
The 7th session of the open-ended intergovernmantal working group (OEIGWG) on transnational corporations and other business enterprises with respect to human rights took place between 25 and 29th October 2021. Discussions focused mainly on the third revised draft of the legally binding instrument which was released in August 2021 by the Permanent Mission of Ecuador, on behalf of the Chairmanship of the OEIGWG. The report of the session is available here.
FINANCING A JUST TRANSITION RELEASES A REPORT ON THE ROLE OF FINANCIAL INSTITUTIONS IN A JUST TRANSITION
Financing a Just Transition, a UK-based coalition of more than 40 banks, investors and other financial institutions published a report titled Just Zero focused on the role of leading financial institutions in the UK in achieving a just transition and system-wide change. Key messages from the report include the need to reallocate capital to achieve a net-zero economy and its implications for better-quality jobs, integrating the social and environmental dimensions of the transition into the decisions and policies of financial institutions and an analysis of policy frameworks needed to deliver the systemic change needed for a just transition.
UNCTAD 15
The 15th session of the United Nations Conference on Trade and Development (UNCTAD) took place from the 3rd to the 7th of October between Barbados and Geneva under the theme “From inequality and vulnerability to prosperity for all”. A great emphasis was put on the Covid-19 recovery and the need for greater multilateralism and regional integration to improve developing countries economic resilience. The meeting also comprised a three-day “World Leaders Summit” with three dialogues: “Global Vulnerabilities: Call from a Vulnerable Place”, “Is the COVID-19 crisis really a game-changer?” and ‘Building a more prosperou path – Matching the Scale of the Moment’.
COP OF THE AARHUS CONVENTION ESTABLISHES A SPECIAL RAPPORTEUR ON ENVIRONMENTAL DEFENDERS
The Conference of the Parties to the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention) has deliberated on the 21st of October on the creation of a Rapid Response Mechanism (RRM) for the protection of environmental defenders that generated the mandate of an independent Special Rapporteur on Environmental Defenders. The decision comes after a report from the Special Rapporteur on the Situation of Human Rights Defenders Mary Lawlor pointing that 50% of the human rights defenders killed in 2019 were working around issues of land, environment, business activity, poverty and lives of indigenous people, Afro-descendants and other minorities..
UK GOVERNMENT COMMITS TO APPROVING MANDATORY DISCLOSURE OF CLIMATE-RELATED FINANCIAL INFORMATION FOR COMPANIES AND FINANCIAL INSTITUTIONS
The UK government announced plans to make disclosure of climate-related financial information for companies and financial institutions mandatory by April 2022. The law should only apply to large companies registered in the UK and trading on a UK registered market and comes in the context of the country’s Net Zero strategy. According to the Economic Secretary to the Treasury John Glen this legislation will “ not only help tackle greenwashing but also enable investors and businesses to align their long-term strategies with the UK’s net zero commitments.”
FRENCH GOVERNMENT IS CONDEMNED BY THE ADMINISTRATIVE COURT OF PARIS FOR ITS TO MEET NATIONAL COMMITMENTS RELATED TO CLIMATE CHANGE
On October 14, 2021 the administrative court of Paris condemned the State of France to compensate 62 million extra tons of emissions of greenhouse gases from 2015-2018 and to take concrete and immediate measures to comply with its commitments to reduce emissions by December 31, 2022. The lawsuit was brought in 2019 by four nonprofit organizations (Foundation pour la Nature et L’Homme, Greenpeace France, Notre Affaire à Tous and Oxfam France) who alleged the government was in breach of a statutory duty to act based on its failure to reduce greenhouse gas emissions as defined in their own goals. The Court was initially asked to order France to take appropriate measures to meet national targets for reducing greenhouse gas emissions, protect citizens lives by mitigating the effects of climate change and pay a symbolic sum of 1 euro for moral damages. The plaintiffs invoked a statutory duty to act, the French Charter for the Environment, the European Convention for the Protection of Human Rights and Fundamental Freedoms and the principle of law entailing the right of every person to live in a preserved climate system.
THE HUMAN RIGHTS COUNCIL RECOGNIZES THE HUMAN RIGHT TO A CLEAN, HEALTHY AND SUSTAINABLE ENVIRONMENT
The Human Rights Council recognized on the 8th of October for the first time that clean, healthy and sustainable environment is a human right, with 43 votes for, 4 abstentions (China, India, Japan and Russia) and 0 votes against. In a second resolution, the council decided on the establishment of a dedicated Special Rapporteur to the protection of human rights in the context of climate change. This landmark decision comes after years of pressure from stakeholders, with the right being already recognized in different terms in the law of more than 150 states and in a growing body of national and international case law. The resolution, although not legally binding, may strengthen efforts for the recognition of the right to clean, healthy and sustainable environment by other important players such as the UN General Assembly or the Council of Europe.
SEPTEMBER
A NEW GUIDELINE ON SUSTAINABLE TEXTILE PROCUREMENT WAS PUBLISHED BY THE GERMAN GOVERNMENT
The German government published a “Guide for Sustainable Textile Procurement by Federal Administration” (in German), an effort to achieve the objective set out on their sustainability action plan to have 50% of the public textile procurement made in accordance to sustainable criteria. The guidelines cover the whole production process of textiles and the entire supply chain. Although the guide is directed towards four major federal procuring agencies, it also provides guidance for federal states and municipalities.
A BAN ON PRODUCTS MADE WITH FORCED LABOUR WAS PROPOSED BY THE EUROPEAN COMMISSION
The President of the European Commission, Ursula von der Leyen, announced that the EU will propose a ban on products issued from forced labour. In her statement, she affirmed that “Doing business around the world is good, global trade around the world is good and necessary, but this can never, ever be done at the expense of people’s freedom and dignity”.
THE COMMISSION’S CLASSIFICATION OF WHICH ECONOMIC ACTIVITIES CONTRIBUTE TO CLIMATE CHANGE MITIGATION WAS ACCEPTED BY THE EUROPEAN PARLIAMENT
The European Union Taxonomy Regulation adopts a strategy towards sustainable finance in which the main objective is to re-direct the financing flow to environment-friendly activities. In September 2021 the Members of the European Parliament embraced the classification proposed by the Commission that detailed the economic activities suited to minimize climate change. The Delegated Act is intended to work as “screening criteria” to analyse which economic activities are contributing to the mitigation of climate change or not causing harm to the set environment objectives.
THE FRENCH COURT OF CASSATION REVERSED A LOWER COURT’S DECISION AND AFFIRMED THAT LAFARGE COULD BE INDICTED FOR CRIMES AGAINST HUMANITY
In 2016 eleven former Syrian employees, together with ECCHR (European Center for Constitutional and Human Rights) and Sherpa (a French NGO) filed criminal proceedings against Lafarge (a French cement company). The company is accused of having purchased commodities and made payments to the Islamic State (IS) and other armed groups in order to keep its Syrian cement factory up and running between 2012 and 2014. It is claimed that these arrangements, which value has been esteemed to amount to 13 million euros, provided funding to IS amounting to complicity in crimes against humanity. In 2019, the Paris Court of Appeals had dismissed the charges brought against Lafarge for complicity in crimes against humanity. In September 2021, the French Supreme Court reversed this decision and affirmed that Lafarge could be indicted for crimes against humanity.
AUGUST
THE THIRD REVISED DRAFT OF THE UN BUSINESS AND HUMAN RIGHTS TREATY WAS PUBLISHED
In 2014, the UN Human Rights Council adopted a resolution drafted by Ecuador and South America establishing an open-ended intergovernmental working group with a mandate to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporation and other business enterprises. Since then, several versions of the instruments have been released and various sessions of negotiations have taken place. The last version (the third revised draft) of the draft treaty was released on the 17th of august 2021.
THE IPCC RELEASED ITS SIXTH ASSESSMENT REPORT ON CLIMATE CHANGE
On the 9th of August 2021, the Intergovernmental Panel on Climate Change (IPCC) released its report – Climate Change 2021: The Physical Science Basis. Its key findings include the following:
-The 1.5°C rise in global temperature is likely to be reached before 2040.
-Climate change is intensifying the water cycle, affecting rainfall patterns, and melting glaciers, ice sheets and snow covers.
-We will observe the continued rising of the sea level, throughout the 21st century.
-The occurrence of extreme weather events is expected to increase in the coming years.
-Preventing the 1.5°C rise is still possible but would require immediate and large-scale reductions in greenhouse gas emissions of 50% by 2030 and by 100% by 2050.
This report first deliverable of the Sixth Assessment Report, which will be completed in 2022.
JULY
THE FRENCH PARLIAMENT ADOPTED THE CLIMATE AND RESILIENCE BILL
On the 20th of July, the French Parliament adopted a wide-ranging climate bill that will impact enterprises, transports, food industries and other stakeholders. Some of the measures include:
-Phasing out the advertising for fossil fuel energy.
-Banning, from 2025, the single-use food packaging made from polystyrene.
-Banning domestic flights, that are not connecting international flights, in case of journeys that can be made by train in less that two and a half hours.
-Creation of a mandatory “environmental label” for goods and service, that aims to inform consumers about the environmental footprint of their purchases.
-Creation of the crime of ecocide.
The French government announced that this legislation will help to cut greenhouse gas emissions by 40% by 2030 (when compared to 1990 levels).
THE EUROPEAN COMMISSION ADOPTED DECISIVE STEPS TOWARDS A MORE SUSTAINABLE ECONOMY
The European Commission (EC) adopted, on the 6th of July, important measures with impact on sustainable finance. Firstly, the EC adopted a Renewed Sustainable Finance Strategy, which is a package of measures targeted to improve the flow of money towards financing and supporting a transition to a sustainable economy in the EU. The strategy complements other European Green Deal initiatives and identifies four main areas/strategies. Secondly, it adopted a legislative proposal for a European green bond sta ndard (EUGBS), which is a voluntary standard for the green bond market. The proposed Regulation will set a standard for companies and public authorities on how they can use green bonds to finance investments while meeting sustainability requirements. Thirdly, it adopted a Delegated Act supplementing Article 8 of the Regulation (EU) 2020/852 (Taxonomy Regulation). The Delegated Act determines the content, methodology and the way the disclosed information must be presented by the financial and non-financial enterprises, regarding the share part of environmentally sustainable economic activities in their business, investments, or lending activities. The Act will be subject to scrutiny by the European Parliament and the Council for a period of four months (that can be extended by two more months) and if no objections are raised it will be published and enter into force 20 days after.
JUNE
GERMANY ADOPTS THE SUPPLY CHAIN DUE DILIGENCE ACT
On the 11th of June 2021, the German parliament adopted the Supply Chain Due Diligence Act which requires large German companies to exercise due diligence in relation to a defined list of human rights and certain environmental standards in their own operations and the activities of ‘direct’ suppliers. With respect to “indirect” suppliers, a due diligence obligation exists only to the extent that the company obtains ‘substantiated knowledge’ of a possible violation or is otherwise prompted by other circumstances. In terms of enforcement, the law provides that the German Federal Office for Economic Affairs and Export Control is responsible for enforcing the law. Public authorities can investigate cases of non-compliance and issue fines.
NORWEGIAN PARLIAMENT ADOPTED THE TRANSPARENCY ACT
On 10 June 2021, Norway adopted the Act on business transparency and work with fundamental human rights and decent work (‘Transparency Act’) which is set to enter into force in January 2022 (2). The law creates a corporate duty for large and medium-sized companies domiciled in Norway as well as foreign companies selling products and services in Norway, to conduct due diligence in relation to human rights and decent work throughout all their supply chain, and to provide or cooperate to ensure remedy. The law also requires companies to report on their due diligence exercise and grants a ‘right to information’ to any interested stakeholder the right to request information from companies in this respect. As for the enforcement, the law provides that the Norwegian consumer authority shall be responsible for monitoring compliance with the law and providing guidance to the company, and may issue injunctions and impose fines in case of non-compliance.
(2) Act on business transparency and work with fundamental human rights and decent work (also known as the ‘Transparency Law’), Proposition 150 L (2020-2021), available (in Norwegian) at: https://www.regjeringen.no/contentassets/c33c3faf340441faa7388331a735f9d9/no/pdfs/prp202020210150000dddpdfs.pdf
U.S. SUPREME COURT DECIDES IN FAVOUR OF NESTLÉ AND CARGILL IN CHILD SLAVERY CASE
The lawsuit had been filed under the Alien Tort Statute (ATS) – an 18th century statute which provides US federal courts jurisdiction to hear claims against non-US defendants – by six Malian nationals against Cargill Inc and Nestle SA over claims that they were trafficked as child slaves to Ivory Coast and forced to work on cocoa farms. On the 17th of June 2021, the Supreme Court reversed the decision from the Court of Appeals for the 9th Circuit – which had allowed the claim to proceed – and rejected the claim on the grounds that nearly all conduct had taken place outside of the US and that there was no basis for such extraterritorial application of the ATS.
EUROPEAN CLIMATE LAW WAS APPROVED
On the 24th of June 2021, the European Council approved the European Climate Law, which aimed to write into law the goal set out in the European Green Deal to achieve climate-neutrality by 2050. The Climate Law requires EU Institutions and Member States to take the necessary measures to meet the zero greenhouse gas emissions target by 2050, and includes measures to keep track of progress and adjust actions as well as a review of progress every 5 years.
MAY
SPAIN APPROVED A CLIMATE LAW
On the 15th of May 2021, Spain’s Parliament approved a Climate Law that intends to set out climate targets and goals for the future of Spain. It establishes ambitious commitments like:
– The reduction of 23% of Spain’s emission, by 2030, compared with the levels of 1990;
– A goal to generate 74% of the country’s electricity with renewables by 2030;
– The end of fossil fuels’ production on Spain by the 31th of December 2042;
– A prohibition of the technique of hydraulic fracturing (fracking) and also radioactive mining, such as uranium;
– A prohibition for new exploration and production of coal, gas and oil; and a prohibition to sell vehicles that use fossil fuel, by 2040.
U.S. DISTRICT COURT JUDGED IN FAVOUR OF 7 EX-IPI WORKERS
In the US, Chief Judge Ramona V. Manglona decided in favour of 7 Chinese construction workers from the casino-resort project of Imperial Pacific International (IPI), in Saipan, and awarded them $5.91 million over allegations of force labour and human trafficking by IPI’s former contractors and subcontractors.
THE DISTRICT COURT OF THE HAGUE RULED SHELL MUST CUT ITS CO2 EMISSIONS
On the 26th of May 2021, the District Court of the Hague ordered Royal Dutch Shell (RDS) to reduce its CO2 emissions by 45% relative to 2019 levels, in its global operations (including customers and suppliers) by the end of 2030. The case had been filed in 2019 by the Friends of the Earth Netherlands (Milieudefensie), over 17,000 co-plaintiffs and six other NGOs. The Court considered that the CO2 emissions represent a threat to human rights, especially the right to life and the right to respect for family life. The court found that RDS, as the parent company which sets out the corporate policy for the Shell group, has a legal obligation which derives from an ‘unwritten standard of care’ under Dutch tort law to ‘contribute to the prevention of dangerous climate change through the corporate policy it determines for the Shell group’. The court made an explicit reference to soft law instruments that had been endorsed by RDS, such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises a ‘universally endorsed’ and ‘authoritative’ soft law instruments suitable as guidelines in the interpretation of the unwritten standard of care, regardless of whether or not RDS had committed to the UNGPs.
APRIL
LEGISLATIVE PROPOSAL FOR A DIRECTIVE ON SUSTAINABILITY DISCLOSURES FOR COMPANIES
On the 21st of April 2021, the European Commission presented a legislative proposal for a Corporate Sustainability Reporting Directive (CSRD) , aiming to amend four existing pieces of legislation: the EU Non-Financial Reporting Directive (NFRD), the Audit Directive and the Audit Regulation as well as the Transparency Directive. The proposal introduces significant changes to the NFRD, which include, inter alia:
– The extension of the scope of reporting companies: whilst the NFRD was applicable to large ‘public interest entities’ (i.e., listed companies, banks and insurance companies) with more than 500 employees, the proposal seeks to extend the scope to include all large (1) as well as all listed companies, with the exception of listed micro-enterprises;
– The introduction of a general EU-wide audit requirement for the sustainability reports;
– The inclusion of new sustainability reporting requirements; and,
– The obligation for the companies to digitally tag the reported sustainability information.
(1) Defined as companies that have, on their balance sheet date, more than 250 employees on average during the financial year, and a balance sheet total in excess of €20m or a net turnover in excess of €40m.
PROVISIONAL AGREEMENT ON THE EUROPEAN CLIMATE LAW
The European Parliament and the European Council presented a provisional agreement for the European Climate Law. This Regulation is part of the European Green Deal and represents a deep commitment to reach, by 2050, climate neutrality. It foresees, inter alia:
– A climate target for 2030: a reduction of at least 55% in the net emissions of green-houses gas, when compared to 1990;
– A commitment to prepare, with the different sectors of the economy, sector-specific plans to pursue climate neutrality;
– Provisions directed to the adaptation to climate change; and
– Coherent and efficient policies in the European Union that have climate neutrality as an objective.
MARCH
AN ENGLISH COURT RULED THAT A SHIPPING COMPANY CAN BE SUED OVER A SHIPBREAKER’S DEATH IN BANGLADESH
The case had been filed in the UK against UK shipping company, Maran, who had acted as an agent to sell a defunct vessel to a ‘demolition buyer’ who, in turn, had conveyed it to a ship breaking yard in Bangladesh to perform the demolition of the vessel in spite of the international concern regarding the dangerous working practices in the Bangladesh shipbreaking yards which have been raised over the past few years. In the process of the demolition of the vessel, the worker fell to his death and his widow brought proceedings against Maran in the English courts in negligence and unjust enrichment for damages. On the 10th of March 2021, an English Court of Appeal held that Maran could be found to incur a duty of care to the shipbreaking worker on the basis that the company knowingly exposed him to significant dangers.
THE EUROPEAN PARLIAMENT ADOPTED A RESOLUTION ON CORPORATE DUE DILIGENCE AND ACCOUNTABILITY
On the 10th of March 2021, the European Parliament approved a resolution with recommendations to the Commission on corporate due diligence and corporate accountability which includes a draft directive. The draft directive provides that Member States shall lay down rules to ensure that companies carry out due diligence with respect to potential or actual adverse impacts on human rights, the environment and good governance in their operations and throughout their value chain. in terms of scope, it would cover EU-domiciled large companies, publicly listed small and medium-sized companies and SMEs operating in high-risk sectors as well as non-EU domiciled companies selling goods or providing services in the internal market. The draft directive provides for a public enforcement mechanism through a national competent authority responsible for the supervision of the application of the directive, as well as for a civil liability mechanism for harms caused or contributed to by acts or omissions of a company subject to the directive or another entity under its control.
NEW BILL ON RESPONSIBLE AND SUSTAINABLE INTERNATIONAL BUSINESS BEING CONSIDERED IN THE NETHERLANDS
In March 2021, four Dutch political parties submitted a draft law on responsible and sustainable international business to the Dutch Parliament. The draft law imposes a duty of care on all the companies registered in the Netherlands or selling goods or providing services to the Dutch market to prevent adverse human rights and environmental impacts arising out for their activities and value chains. It also imposes on large companies human rights and environmental due diligence obligations. In terms of enforcement, it provides for a public regulator which can issue binding instructions and financial sanctions in case of non-compliance.
FEBRUARY
UK SUPREME COURT CLAIMS THAT NIGERIAN FARMERS CAN BRING CLAIMS AGAINST SHELL IN ENGLISH COURTS
On the 12th of February 2021, the UK Supreme Court held that the proceedings filed in the UK by approximately 42,500 Nigerian residents against parent company Royal Dutch Shell and its Nigerian subsidiary, SPDC, could proceed in English courts. The court reaffirmed, following the Vedanta decision, that a parent company may incur a duty of care in respect of the activities of a subsidiary in determined situations.
UK SUPREME COURT RULED THAT UBER DRIVERS ARE WORKERS
On the 19th of February 2021, the UK Supreme Court unanimously held that Uber drivers are to be classified as ‘workers’ and not self-employed under employment law, meaning that they will now be entitled to associated worker rights such as minimum wage and holiday pay.
JANUARY
VEDANTA RESOURCES SETTLED THE CLAIMS BROUGHT IN THE ENGLISH COURTS BY ZAMBIAN VILLAGERS OVER ALLEGED COPPER MINE POLLUTION
In this case, over 1,800 Zambian villagers had brought a claim against the UK parent company, Vedanta, and its Zambian subsidiary, KCM, on the basis of the alleged pollution from discharges of effluent from the Nchanga Copper mine in Zambia owned and operated by KCM. In April 2019, the UK Supreme Court had allowed the claims to proceed and affirmed that a parent company may incur a duty of care in respect of the activities of a subsidiary in determined situations.
A DUTCH COURT ORDERED SHELL NIGERIA TO COMPENSATE NIGERIAN FARMERS
In this case, separate proceedings had been filed by 4 Nigerian farmers in the Netherlands against parent company Royal Dutch Shell (RDS) and its Nnigerian subsidiary, SPDC, on the grounds of the environmental damage allegedly caused by oil leaks from pipelines and associated infrastructures operated by SPDC. On the 29th of January 2021, the Court of Appeal of the Hague delivered three judgments finding SPDC strictly liable for the oil spills in the villages of Oruma and Goi (nigeria). The court stated that Shell could not prove, beyond any reasonable doubt, that the leakages resulted from sabotage. The court also found that RDS owed a duty of care to the communities in the vicinity of the pipeline to ensure that a leak detection system was installed and ordered the company to ensure the Oruma pipeline was equipped with one.
